Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Saturday, November 14, 2009

Integration Clause: Purpose and Effect of Merger Clause in Contracts

"ENTIRE AGREEMENT" CLAUSE & THE PAROL EVIDENCE RULE The purpose of an integration clause is to invoke the parol evidence rule when appropriate. Burleson State Bank v. Plunkett, 27 S.W.3d 605, 615 (Tex. App.-Waco 2000, pet. denied). An unambiguous contract will be enforced as written, and parol evidence will not be received for the purpose of creating an ambiguity or to give the contract a meaning different from that which its language imparts. See David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450 (Tex. 2008). SOURCE: 13-08-00264-CV (Thirteenth Court of Appeals) (November 12, 2009) (agreement contained an integration clause, providing that the written agreement constituted the entire agreement between the parties)

Enforcing unambiguous contract (breach of contract cause of action)

PROVING BREACH OF CONTRACT CAUSE OF ACTION (ambiguous vs. unambiguous contracts)

In order to succeed on a breach of contract claim, [Plaintiff] would have had to prove that: (1) a valid contract existed; (2) it performed or tendered performance; (3) [Defendant] breached the contract; and (4) [Plaintiff] sustained damages as a result of the defendant's breach. Adams v. H & H Meat Prods., Inc., 41 S.W.3d 762, 771 (Tex. App.-Corpus Christi 2001, no pet.).

Netrana contends that it performed its obligations under the contract by "standing ready, willing, and able to perform professional services" and that TXU breached the guaranteed minimum payment provision of the contract. Thus, we look to the contract under our well recognized rules of contract construction to determine if a minimum payment provision existed in the amended agreement.


In construing a written contract, the primary concern is to ascertain and to give effect to the parties' intentions as expressed in the document. Frost Nat'l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 311-12 (Tex. 2005). We consider the entire writing and attempt to harmonize and to give effect to all of the contract's provisions. Id. at 312.

We construe contracts "'from a utilitarian standpoint bearing in mind the particular business activity sought to be served'" and "'will avoid when possible and proper a construction which is unreasonable, inequitable, and oppressive.'" Id. (quoting Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987)). "

The language in a contract is to be given its plain grammatical meaning unless doing so would defeat the parties' intent." Amtech Elevator Servs. Co. v. CSFB 1998-P1 Buffalo Speedway Office Ltd. P'ship, 248 S.W.3d 373, 379 (Tex.App.-Houston [1st Dist.] 2007, no pet.).


If, after the pertinent rules of construction are applied, the contract can be given a definite or certain legal meaning, it is unambiguous, and we construe it as a matter of law. Frost Nat'l Bank, 165 S.W.3d at 312. However, if after such rules are applied, the meaning of the contract remains uncertain or is susceptible to more than one reasonable interpretation, it is ambiguous. Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995); Coker v. Coker, 650 S.W.2d 391, 393-94 (Tex. 1983).


If a contract is ambiguous, the contract's interpretation becomes a fact issue to be resolved by deciding the parties' true intent, for which the fact finder may consider extraneous evidence of intent. See Nat'l Union Fire Ins. Co., 907 S.W.2d at 520; Coker, 650 S.W.2d at 394-95.

Whether a contract is ambiguous is a question of law to be determined "by looking at the contract as a whole in light of the circumstances present when the contract was entered." Coker, 650 S.W.2d at 394.

SOURCE: 13-08-00264-CV (13th Court of Appeals) (Nov. 12, 2009)

Intentional Misrepresentation akin to Fraud

ELEMENTS OF INTENTIONAL MISREPRESENTATION TORT A claim of intentional misrepresentation has the same elements as a fraud claim. See Smith v. Tilton, 3 S.W.3d 77, 82 n.3 (Tex. App.-Dallas 1999, no pet.). The elements of a cause of action for fraud are: (1) that a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party suffered injury as a result. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001). [Also see --> fraudulent misrepresentation] BREACH OF CONTRACT AND FRAUD DISTINGUISHED A promise to do an act in the future constitutes fraud only when made with no intention of performing the promise at the time the promise was made. Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex.1998). NON-PERFORMANCE UNDER CONTRACT, WITHOUT MORE, NOT FRAUD The mere failure to perform a contract is not evidence of fraud. Id. Fraudulent intent may be established by either direct or circumstantial evidence, and the subsequent failure to perform the promise, while not alone dispositive, can be considered with other factors to establish intent. Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434-35 (Tex. 1986). SOURCE: 13-08-00264-CV (Corpus Christi-Edinburg Court of Appeals)(11/12/09)

Tuesday, November 10, 2009

Fraud in a Real Estate Transaction (statutory cause of action)

Real Estate Fraud

Section 27.01 of the business and commerce code provides:

(a) Fraud in a transaction involving real estate . . . consists of a

(1) false representation of a past or existing material fact, when the false representation is

(A) made to a person for the purpose of inducing that person to enter into a contract; and

(B) relied on by that person in entering into that contract . . . .

Tex. Bus. & Com. Code Ann. § 27.01 (West 2009).

Statute of Frauds: Sale of Real Property, Real Estate Transactions

Statute of Frauds (Real Estate Sales Transaction) To be enforceable, a contract for the sale of real estate must comply with the statute of frauds. Tex. Bus. & Com. Code Ann. § 26.01(b)(4) (West 2009); Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex. 1978). Section 26.01 of the business and commerce code provides: (a) A promise or agreement described in Subsection (b) of this section is not enforceable unless the promise or agreement, or a memorandum of it, is (1) in writing; and (2) signed by the person to be charged with the promise or agreement or by someone lawfully authorized to sign for him. (b) Subsection (a) of this section applies to: . . . (4) a contract for the sale of real estate . . . . Tex. Bus. & Com. Code Ann. § 26.01. Whether a contract meets the requirements of the statute of frauds is a question of law. Bratcher v. Dozier, 346 S.W.2d 795, 796 (Tex. 1961); West Beach Marina, Ltd. v. Erdeljac, 94 S.W.3d 248, 264 (Tex. App.--Austin 2002, no pet.). [T]he statute of frauds bars a fraud claim to the extent that the plaintiff seeks to recover as damages the benefit of a bargain that cannot otherwise be enforced because it fails to comply with the statute of frauds. Haase v. Glazner, 62 S.W.3d 795, 799 (Tex. 2001). This is because "the Statute exists to prevent fraud and perjury in certain kinds of transactions by requiring agreements to be set out in a writing signed by the parties. But that purpose is frustrated and the Statute easily circumvented if a party can use a fraud claim essentially to enforce a contract the Statute makes unenforceable. The statute of frauds may not bar a common-law fraud claim to the extent the plaintiff seeks out-of-pocket damages incurred in relying upon the defendant's alleged misrepresentations because "[w]ith respect to such damages, [the plaintiff] is not attempting to enforce the otherwise unenforceable contract. . . . These kinds of damages are not part of the benefit of any alleged bargain between the parties." Haase v. Glazner, 62 S.W.3d 795, 799-800 (Tex. 2001). We need not address the type of damages Joseph seeks because statutory real estate fraud requires the existence of a contract. SOURCE: 03-07-00197-CV (Austin Court of Appeals (11/6/09) (Because there is no enforceable contract that satisfies the statute of frauds, the trial court did not err in granting appellees' motion for summary judgment.)

Monday, November 9, 2009

Conversion and Civil Theft Claim Under Texas Statute

TEXAS THEFT LIABILITY ACT (relies on criminal code definition of theft) CIVIL STATUTORY CAUSE OF ACTION FOR THEFT (& ATTORNEYS FEES) The theft liability act creates liability for damages resulting from a theft and defines a theft as "unlawfully appropriating property or unlawfully obtaining services" as described in the penal code, and specifically includes section 31.03. Tex. Civ. Prac. & Rem. Code Ann. §§ 134.002-.003 (West 2005); Tex. Penal Code Ann. § 31.03 (West Supp. 2009). Referring to section 31.03, section 31.02 provides:

Theft as defined in Section 31.03 constitutes a single offense superseding the separate offenses previously known as theft, theft by false pretext, conversion by a bailee, theft from the person, shoplifting, acquisition of property by threat, swindling, swindling by worthless check, embezzlement, extortion, receiving or concealing embezzled property, and receiving or concealing stolen property.

Tex. Penal Code Ann. § 31.02 (West 2003). CONVERSION - COMMON-LAW CAUSE OF ACTION Conversion is [...] a cause of action similar to theft or one means by which a person "unlawfully appropriates property with intent to deprive the owner of property." See id. § 31.03. Even though Karbach did not expressly allege a violation of the theft liability act in his original petition, he did allege conversion, and the district court granted summary judgment on that claim. As Karbach's amended petitions merely asserted the same claim in a different form, the district court's judgment was effective against Karbach's later-pleaded theft liability act claim. See Wortham, 179 S.W.3d at 202; Lampasas, 988 S.W.2d at 435-37. SOURCE: 03-06-00636-CV (3rd CoA - Austin) (Nov. 6, 2009)

Fraudulent Inducement Claim Is Similar to Fraud

FRAUDULENT INDUCEMENT (OF CONTRACT, ETC.) Fraudulent inducement is a type of fraud and, like any cause of action for fraud, requires (1) a material misrepresentation, (2) which was false, (3) which was either known to be false when made or was asserted without knowledge of its truth, (4) which was intended to be acted upon, (5) which was relied upon, and (6) which caused injury. See Formosa Plastics, 960 S.W.2d at 47; Texas S. Univ. v. State St. Bank & Trust Co., 212 S.W.3d 893, 914 (Tex. App.--Houston [1st Dist.] 2007, pet. denied). FRAUDULENT INDUCEMENT AND FRAUD: SHARED ELEMENTS [C]ourts have held that a summary judgment motion--if directed at the element of one cause of action--can be effective against even subsequently pleaded claims if they share that same element. See Wortham v. Dow Chem. Co., 179 S.W.3d 189, 202 (Tex. App.--Houston [14th Dist.] 2005, no pet.); Lampasas v. Spring Center, Inc., 988 S.W.2d 428, 435-37 (Tex. App.--Houston [14th Dist.] 1999, no pet.). Consequently, even though Karbach did not specifically use the term "fraudulent inducement" in his original petition, the district court's order granting summary judgment as to each of Karbach's claims, including fraud, was effective against his later-pleaded fraudulent inducement claim. Even considering the tri-party loan agreement as the basis of the fraudulent inducement claim, as we have discussed, our analysis does not change. SOURCE: 03-06-00636-CV (Third Court of Appeals - Austin) (11/6/09)

Trust Fund Act: Civil Liabilty for Misapplication of Construction Trust Funds


The Texas Construction Trust Fund Act makes construction funds "trust funds" if the payments are made to a contractor or subcontractor or to an officer, director, or agent of a contractor or subcontractor, under a construction contract for the improvement of specific real property in this state. Tex. Prop. Code Ann. § 162.001 (West Supp. 2009). Beneficiaries of the trust fund include artisans, laborers, mechanics, contractors, subcontractors, or materialmen who furnish labor or material for the construction or repair of an improvement. Id. § 162.003 (West Supp. 2009).


A party who misapplies trust funds under the Trust Fund Act is subject to civil liability to trust fund beneficiaries whom the Act was designed to protect. Id. § 162.031 (West Supp. 2009); Dealers Elec. Supply Co. v. Scoggins Constr. Co., 52 Tex. Sup. Ct. J. 1088, 2009 Tex. LEXIS 475, at *16-17 (Tex. July 3, 2009).

SOURCE: 03-06-00636-CV (Austin Court of Appeals (11/6/09)

Elements of Suit on (Sworn) Account (Tex. R. Civ. P. 185)


The elements of a cause of action on a sworn account are (1) a sale and delivery of the goods; (2) that the amount of the account is just, that is, that the prices are charged in accordance with an agreement or, in the absence of an agreement, they are the usual customary and reasonable prices for those goods; and (3) that the amount is unpaid. See Site Work Group, Inc. v. Chem. Lime Ltd., 171 S.W.3d 512, 513–14 (Tex. App.-Waco 2005, no pet.); PennWell Corp. v. Ken Assocs. Inc., 123 S.W.3d 756, 766 (Tex.App.-Houston [14th Dist.] 2003, pet. denied


 “A defendant’s verified denial of the correctness of a plaintiff’s sworn account, in the form required by Rule 185, destroys the evidentiary effect of the itemized account and forces the plaintiff to put on proof of its claim.” Site Work Group, Inc. v. Chem. Lime Ltd., 171 S.W.3d 512, 513 (Tex. App.—Waco 2005, no pet.) (citing Rizk v. Fin. Guardian Ins. Agency, Inc., 584 S.W.2d 860, 862 (Tex. 1979)). However, even when a defendant verifies its sworn denial to a suit on a sworn account, a plaintiff may properly obtain a summary judgment on its sworn account claim by filing “legal and competent summary judgment evidence establishing the validity of its claim as a matter of law.” PennWell Corp. v. Ken Assocs., Inc., 123 S.W.3d 756, 765 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (citing United Bus. Machs. v. Entm’t Mktg., Inc., 792 S.W.2d 262, 264 (Tex. App.—Houston [1st Dist.] 1990, no writ)).

 SOURCE: 01-08-00890-CV (Houston Court of Appeals - 1st District) (11/5/09)

Rule 185 of the Texas Rules of Civil Procedure 

Sunday, November 8, 2009

Tortious Interference with Prospective Business

PROVING TORTIOUS INTERFERENCE To establish tortious interference with a prospective business relationship, a plaintiff must prove (i) a reasonable probability that the plaintiff would have entered into a business relationship; (ii) an independently tortious or unlawful act by the defendant that prevented the relationship from occurring; (iii) the defendant did such act with a conscious desire to prevent the relationship from occurring or the defendant knew the interference was certain or substantially certain to occur as a result of the conduct; and (iv) the plaintiff suffered actual harm or damages as a result of the defendant's interference. See Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 726 (Tex. 2001); Baty v. Protech Ins. Agency, 63 S.W.3d 841, 860 (Tex. App.--Houston [14th Dist.] 2001, pet. denied). Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 726 (Tex. 2001); Bradford v. Vento, 48 S.W.3d 749, 757-58 (Tex. 2001); Richardson-Eagle, Inc. v. William M. Mercer, Inc., 213 S.W.3d 469, 475 (Tex. App.--Houston [1st Dist.] 2006, pet. denied); Bright v. Addison, 171 S.W.3d 588, 598 (Tex. App.--Dallas 2005, pet. denied); Baty v. Protech Ins. Agency, 63 S.W.3d 841, 860 (Tex. App.--Houston [14th Dist.] 2001, pet. denied). SOURCE: 03-09-00114-CV (Austin Court of Appeals) (11/06/09)